Competencies and Work Hours

Competencies and Work Hours

DOI: 10.4018/978-1-5225-2179-2.ch003
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People who know about design, marketing, finance, technology, human resource management, operations and trade law must be able to interact and combine their knowledge to make products. These same products cannot be made in societies that are missing parts of this capability set.

This aligns well with the statement of Pisano & Shih (2009, p. 7) that

In reality, there are relatively few high-tech industries where the manufacturing process is not a factor in developing new—especially radically new—products. That’s because in most of these industries product and process innovation are intertwined. So the decline of manufacturing in a region sets off a chain reaction. Once manufacturing is outsourced, process-engineering expertise can’t be maintained, since it depends on daily interactions with manufacturing. Without process-engineering capabilities, companies find it increasingly difficult to conduct advanced research on next-generation process technologies. Without the ability to develop such new processes, they find they can no longer develop new products. In the long term, then, an economy that lacks an infrastructure for advanced process engineering and manufacturing will lose its ability to innovate.

The importance of education and its deployment in entrepreneurial endeavours is underscored in studies by e.g. Gennaioli et al. (2011); Roys & Seshadri (2013); Millan et al. (2014); Prettner & Strulik (2014); Hanushek & Woessmann, 2015). There has also been a long understanding that education as a rule translates into higher earnings (Psacharopoulos, 1994; Psacharopoulos & Patrinos, 2004; Dickerson & Vignoles, 2007; Hanushek & Woessmann, 2008; Greenwood et al., 2011; Autor, 2014). On average, compared to those with an upper secondary education, tertiary-educated adults earn about 1.6 times more than their peers, while individuals without an upper secondary education earn 24% less and the difference in earnings from employment between these two groups increased from 75 percentage points in 2008 to 79 percentage points in 2012 (Figure 1). (OECD, 2014a).

Figure 1.

Percentage of 25-64 year-olds who have attained tertiary education and earnings differentials between adults with tertiary and upper secondary education 2012 (OECD, 2014a)


Several studies of firms from different countries and industries have all shown that workforce training is strongly linked to productivity (Wood et al., 2001; Tamkin et al., 2008) where the gains to employers are about twice the gains to the employees (Black & Lynch, 1996) and in addition the durability of the advantage to the employee is long lasting and transition resistant (Blundell et al., 1996). The American Society for Training and Development2 found a strong link between the level of a company’s investments in formal training and their financial performance in the following year leading to improvements in the firm’s stock performance as well as improved gross profit margin and market value per employee (Bassi & McMurrer, 2007) in addition investment in training increases firm survival (Collier et al., 2005). It has been shown that employee training generates increased firm productivity (Koike & Inoki, 1990; Mason & Wagner, 2002; Islam & Syed Shazali, 2011) and underpins the firm’s ability to innovate (Mina et al., 2005) and to adapt to new rapidly changing requirements (Mason & Wagner, 2005; Ueshima et al., 2006; Jürgens & Krzywdzinski, 2015). A final point to be made is that there is a not insignificant time lag between the training taking place and the outcome being achieved since the training frequently needs to be complemented with investment in capital equipment and the development of co-specialised skills residing in the employee as relates to this capital equipment.

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